In layering, the specified amount in excess of the Ceding Company‘s retention that is ceded to a particular reinsurer or group of reinsurers. For example, the first $300,000 in excess of the Ceding Company’s retention of $100,000. See Layer, Layering, and Second Excess.
Contract under which the ultimate liability of the reinsurer is capped and on which anticipated investment income is expressly acknowledged as an underwriting component. Also known as Financial Reinsurance because this type of coverage is often bought to improve the balance sheet effects of statutory accounting principles.
Also known as Nontraditional Reinsurance, Limited Risk Reinsurance, and Financial Reinsurance A term used to describe a broad spectrum of treaty reinsurance arrangements which provide reinsurance coverage at lower margins than traditional reinsurance, in return for a lower probability of loss to the reinsurer. This reinsurance is often multi-Year and financially oriented, and can provide a means of financial management … Read more
A form of reinsurance which considers the time value of money and has loss containment provisions. One of its objectives is the enhancement of the cedant’s financial statements or operating ratios, e.g., the Combined Ratio; loss portfolio transfers; and financial Quota Shares are examples. Reinsurance transacted primarily to achieve financial goals, such as capital management, tax planning, or the financing … Read more
Covers losses from specific financial transactions and guarantees that investors in debt instruments, such as municipal bonds, receive timely payment of principal and interest if there is a default. Raises the Credit rating of debt to which the guarantee is attached. Investment bankers who sell asset-backed securities, securities backed by loan portfolios, use this insurance … Read more
A type of surety bond, sometimes called a probate bond, which is required of certain fiduciaries, such as executors and trustees, that guarantees the performance of their responsibilities.
Reserve balances that depository institutions lend each other, usually on an overnight basis. In addition, Federal funds include certain other kinds of borrowings by depository institutions from each other and from federal agencies.
A reinsurance contract under which the Ceding Company has the option to cede and the reinsurer has the option to accept or decline classified risks of a specific business line. The contract merely reflects how individual facultative reinsurance shall be handled.
A reinsurance policy that provides an insurer with coverage for specific individual risks that are unusual or so large that they aren’t covered in the insurance company’s reinsurance treaties. This can include policies for jumbo jets or oil rigs. Reinsurers have no obligation to take on facultative reinsurance, but can assess each risk individually. By contrast, … Read more
A form of life reinsurance which is a hybrid between facultative and automatic. The risk to be ceded is submitted to the reinsurer, which has limited rights to decline individual risks.
